Tuesday's CME Dairy Market recap

Monday’s overnight session pushed Tuesday’s Class III market upward with good volume prior to the CME spot market. After the spot cheese market the gate was opened for the bull. Futures spiked, sold off for a short bit as sellers tried to hit the top, and then recovered to finish higher. August ’14 - March ‘15 settled 12 to 23 cents higher. Cheese futures continued to move up today, but with spot cheddar still carrying a significant discount and the sluggish milk production momentum seen thus far, it is hard to say this rally will not continue for a while longer.

Class IV Futures

Butter futures continue to climb in the front months. The August contract settled at $2.2600 (UP 0.0400). Even though butter futures are at a slight discount to spot, buying interest in this market persists. Monday’s Cold Storage Report implied that the lack of butter inventory growth could keep prices above $2.00 through the end of the year. The rally in butter was not visible in Tuesday’s Class IV market. Futures were mixed with contracts settling five cents lower to eight cents higher through the end of the year.

CME Spot

Cheese buyers showed up early in Tuesday’s spot cheese session, driving up the price of cheddar blocks to $2.0250 (UP 0.0150) and barrels to $2.0325 (UP 0.01750). The block market saw no offers, but five barrels were offered at $2.1000, well above the bids. With the strength we have seen in cheese futures, sellers are most likely waiting for the market to come to them. The spot butter session also saw a good amount of buying interest as multiple bidders raised the market to $2.3000 (UP 0.0150).

Disclaimer: The risk of loss in trading futures and options can be substantial. Past performance is not indicative of futures results.